- “Total lack of engagement” between Mulberry and Frasers has led to offer
- 130p possible offer values Mulberry at £83mn
A spurned Frasers Group (FRAS) has launched a bid for Mulberry (MUL) to avoid another “Debenhams situation”. The swift action comes after the handbag company announced a £10mn cash injection from its largest shareholder, Challice, after market close on Friday. Mike Ashley’s retail conglomerate, which already owns 37 per cent of Mulberry, said there was a risk Mulberry would be a repeat of Debenhams, where a “perfectly viable business is run into administration”.
The possible offer is 130p a share in cash, which values the overall company at £83mn. Challice holds 56 per cent of Mulberry, so any buyout faces a high barrier to success unless the Singaporean billionaires behind it are looking for an exit.
Mulberry had traded as high as 300p in 2022, but has come down since then as low-end luxury sales have trended down. Its sales for the 2024 financial year, ending 30 March, were down 4 per cent on the prior year to £153mn. Sales have weakened further in the current financial year.
The company said it needed new cash to go ahead with plans made by new chief executive Andrea Baldo, who started on 1 September.
Frasers said it was not invited to increase its stake and called the situation “untenable”. “As a committed long-term investor in Mulberry, Frasers would have been willing to underwrite the subscription in its entirety, potentially on better terms for the company,” the company said.
“Whilst the board of Mulberry provided a holding response on 29 September, given the accelerated timeframe associated with the proposed subscription and the need to progress the proposal expeditiously, Frasers considers their response to be wholly unsatisfactory.”
Mulberry posted a £34mn pre-tax loss for the 2024 financial year, compared to a £13mn profit the year before.
“Whilst the financial performance for the year was disappointing, we believe that the combination of the appointment of a new CEO, our new debt facility and the capital raising announced today will put the group on a firm footing to ensure we are well set up for future growth,” said chair Chris Roberts on Friday.
Mulberry shares climbed 2 per cent to 120p on news of the Frasers approach.